Defense Industry Fears Tiny Budget Cuts

While both parties in Congress scramble to do the bidding of the defense industry and put off some or all of even the modest cuts to defense spending in the sequestration deal, the Pentagon and the defense industry is preparing for a little less gravy on the train in coming years.

Sequestration or not, the defense industry is bracing for a bad decade.

Contractors are hoarding cash. Top firms are eyeing potential mergers. And old alliances are cracking. Even senior Republicans on the House and Senate Armed Services Committees acknowledge a shrinking military is inevitable as the U.S. withdraws from Afghanistan after more than a decade of war.

Gosh, what a shame. After a decade of war that has cost trillions of dollars, none of which we bothered to pay for as we spent it, the defense budget might go down a little bit in the future. Or at least not go up quite as much as before.

Defense insiders are cautiously optimistic Congress will act to avert sequestration, which would reduce Pentagon spending by about $55 billion during the current fiscal year. For them, the real problem is what comes next.

“There are few companies, if any, planning for a full-year sequester,” said defense consultant James McAleese.

But a deal to stave off the automatic spending reductions is almost certain to include defense cuts of its own, he said. And that’s only the beginning. “This confrontation is going to be happening either every year or every other year,” he warned.

The president’s latest deficit-reduction plan would slash the defense budget by another $100 billion over 10 years. And McAleese said he views that number as a floor, not a ceiling. “The market’s expectation is that the compromise would be $15 [billion] to $20 billion,” he explained, referring to cuts carried out each year over a decade.

Oh, the humanity! A whopping 2-3% cut! How ever will we survive only spending 45% of all the world’s military spending instead of 47 or 48%? We might have to put off bombing a nation full of brown people who haven’t done anything to harm or threaten us by a year or two instead of sticking to our rigorous schedule of at least once per decade. Defense contractor CEOs might have to start taking only seven-figure annual bonuses instead of eight-figure ones. Once someone think of the plutocrats?

Oh, please! Zombie Osama bin Laden is drooling (drooling!) at the idea of a weak US defense. Do you have any idea at all how much money it takes to explode a swarthy foreigner in his tent with his AK47? Brazillions!

Reginald Selkirk

Our military effectiveness will be fine. The defense industry will be fine. But those who get laid off will find add to the unemployment figures, so the overall economy may suffer.

shouldbeworking

America will just have find some country closer to home to attack. Oh, crap. How soon can I get Texas and Louisiana to remove map skills from their school curricula?

And you know that’s not going to be entirely because of decreased revenues. It’s going to be to preserve the bonuses of the senior executives and big shareholders. The defense-industrial complex could have invested some of the gravy it was sucking in, to figure out how to make better stuff, or to do something useful (they’ve got assloads of really good boffins) but of course they didn’t.

One thing that isn’t clear to me is how much flexibility the DoD would have in making these cuts. There are certainly weapon systems and programs that aren’t needed that could be cut, but what if they end up cutting the VA at a time when they need more money to care for wounded and traumatized veterans?

What we really need is a serious, detailed, and long look at our defense spending, not automatic cuts that come about because of failed legislation.

JasonTD“What we really need is a serious, detailed, and long look at our defense spending, not automatic cuts that come about because of failed legislation.”

JasonTD, Defense is like guns and venereal diseases; the more you have the safer you are.

No?

How about, the larger Defense is the more efficient it gets, due to economy of scale, even if you always lose money on every purchase. (“How do you profit?” “Volume!”) You’d be a fool not to spend more!

No?

Okay, how about Republicans like making shit explode even if it’s a bad idea and Democrats don’t want to get called “weak” even though they will anyway.

Karen Locke

The sad thing is that it can be really, really hard to get another job if you’re laid off from a defense company. The interviewer says “So tell me what you did at your previous job.” And sometimes all you can answer with are vague generalities, because the interesting part of your work is classified. Obviously this doesn’t happen to everybody; if you were fabricating airplane wings, it isn’t a big deal. If you were engineering upgrades to a terrain-following radar, you’re hosed.